Markets continue with sideways volatility as the election gets closer. Given the level of uncertainty that surrounds both the election itself and the prospect of a confused and uncertain outcome that lasts for weeks, it isn’t surprising that marginal investment dollars would sit it out, waiting for clarity.
We know several things.
First, although another stimulus deal may be delayed until after the election, the likelihood that a deal will eventually be reached is extremely high.
Second, in addition to that fiscal support, the central bank monetary support is robust and ongoing. A rate hike or a substantial slowdown in quantitative easing remain distant. Free liquidity is a tide; volatility is a wave.
Third, investment themes are being created by social, political, and regulatory forces that will prove enduring no matter who occupies the White House, and no matter which party — if either — controls Congress. We bring them to you every week.
Fourth, progress being made against the pandemic on all levels means that the economic recovery is likely to continue, even if there are hiccups, and even if fear proves difficult to eradicate.
The upshot? Until there is a fundamental change in these underlying theses, investors should see weakness as an opportunity. They should not stop looking at long-term opportunities and long-term risks. To us, that means to stay alert to developing themes, such as the ones we bring to you consistently, and to take advantage of weakness to add to positions — and also to patiently build an allocation to gold for the day that the chickens come home to roost.
Thanks for listening; we welcome your calls and questions.
